Tom Emmer, the four-term Republican member of Congress from Minnesota and an outspoken critic of Gary Gensler, slammed SEC Chair on Twitter for his “haphazard and unfocused” crypto information-gathering efforts and demanded the official to speak up before Congress.
“Gary Gensler must testify before Congress and answer questions about the cost of his regulatory failures,” the senator stated.
As a co-chair of Blockchain Caucus, a bipartisan group of approximately 40 Congress members who advocate for the hands-off regulatory approach to blockchain technology, Tom Emmer co-authored a March 16 letter to Gensler, where he questioned SEC’s use of the Division of Enforcement and Division of Examination to obtain information from crypto firms.
Emmer asserted that Gensler’s approach to investigating crypto firms was “not targeted, intentional, or clear,” but rather “haphazard and unfocused.” The letter posed 13 questions to Gensler, mostly centered around the SEC’s efforts to collect information from the industry. Among others, these questions included:
- Over the past five years, how many voluntary document requests has the SEC sent to individuals, project teams or entities regarding activities related to cryptocurrency, digital assets or other uses of blockchain technology, and on average how many questions were asked.
- On average, year-by-year for the last five years, what are the expected compliance costs imposed on relevant entities to respond to your commission’s voluntary document requests?
- Has the SEC conducted a cost-benefit analysis to determine the fairness and efficacy of its requests?
- What proportion of all approximate number of hours spent over the past five years on voluntary document requests are allocated toward cryptocurrency and blockchain subject matter as compared to all other SEC-interested subject matters?
However, according to Emmer, Gensler’s response — which came two months later — evaded the questions that would have shed some light on the “apparent inconsistencies” in his approach to investigating crypto companies and instead provided Congress with a lengthy description of the roles of the SEC’s Enforcement and Examination Divisions.
“Gensler has repeatedly dodged Congress at the expense of investors (hasn’t publicly appeared before the House Financial Services since October 5, 2021), leaving us to learn about the SEC's crypto investigations, like the one into FTX, through the media,” Emmer stated, adding that Gensler’s flawed strategy caused him to miss Terra/Luna, Celsius, Voyager, and FTX.
This is not the first time crypto advocate Emmer openly criticizes SEC’s Chair. Last month, the senator tweeted that Gensler’s poor leadership was partly to blame for the FTX debacle.
“Crypto startups must not be weighed down by extra-jurisdictional and burdensome reporting requirements,” Emmer wrote earlier in March. “We will ensure our regulators do not kill American innovation and opportunities.”
Much of Gensler’s efforts as the SEC Chairman were focused on determining whether cryptocurrencies can be deemed securities under the Howey test, while not providing a clear regulatory framework for digital assets. His approach to crypto, called by many “regulation by enforcement,” drew heavy criticism from industry leaders and advocates, who voiced concerns that it may stifle innovation and leave the US behind in blockchain technology adoption.